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How to construct your Presentation with the Questions investors want to be answered
1. What's the Product or Service?
Investors do not know you, your business, your market. You must give them context about each. Define your product or service in two short sentences.
2. What problem does Product or Service solve?
Successful startups define a problem in the market that, according to Eugene Schwartz who wrote Breakthrough Advertising and defined 5 stages of awareness.
3. Why will the customer buy it?
No amount of gimmickry or marketing can induce a sale without some education about the challenge faced by people in a specific group or state, country or market.
There are conversations with many people to introduce a product and service. You will need to engage your listener, ask open-ended questions to encourage a dialogue. Do not think of this effort as tedious but as an opportunity to build a community of followers and loyal fans of what your startup does. Keep in mind people will buy what they believe they have contributed to.
4. What's unique about the management team?
A Management team is much like having a resource of experienced people of whom you can ask questions, seek guidance and insights as you build your business. You will want to define the functions and roles you need to fill in the areas of operations, production, finance, marketing, human resources and more. A key functional role to fill is the Administrator. This person take a big picture view of the market, the industry and the subsector you fill. This insight will help guide you in your selection of additional team members to invite to join your management team.
5. Do you have an advisory board
An Advisory Board is essential for a startup because the composition can include business executives, scientists, academics, business owners, former startup owners, and entrepreneurs. You want a blend of skilled individuals who bring insight and experience that expand your thinking as you develop the startup from fledgling to a growing and going concern.
6. How does the company generate revenue?
There are two areas in which to think about generating revenue: a business model and a revenue model.
A business model informs the revenue model. The revenue model informs how the company will generate revenue. The how defines how the company will serve its customer base.
7. What traction does the company have?
Startups are either well-funded or bootstrapping their way to consistent revenue. Traction is gained through consistently introducing the startup to the market through channels that expand and extend the reach in a variety of markets where the targets may be found.
8. What revenues have you generated in the last 12 months?
It is essential and critical to the success of your startup to generate revenue. You are selling a product and/or a service. You need to generate consistent sales. A startup that does not generate revenue is a hobby and not a business. Even if the size of the revenue is small, it generates sales. That is an important component in keeping the startup alive and viable.
9. How much money do you need from an investor?
Tally all your costs and expenses, include essential services needed for the business and calculate what your investment will be in hiring help. Aggregate these numbers and add twenty percent to achieve a baseline number of how much of an investment you will need from an investor.
10. How are you going to allocate the funds?
Use your estimates from the previous question to begin defining a percentage allocation per line item. Define the duration as annual, half year or per quarter. Determine from your market research, from input from your boards if your estimates a close to actual need. Modify according to the market reality of your startup.
11. How much equity are you willing to offer?
Here is a step most startup owners fail to consider. An investment in your startup is the equivalent of a loan. Investors expect a return of their investment. You will want to demonstrate your skill in managing resources. Your equity allocation could be a percentage of estimated profits. This is the reason having an experienced finance professional on your advisory board is essential.
12. How does the investor make a return on his investment?
Once again, an experienced financial professional can help define profit potential, the return of investor's investment and a percentage of the profit allocated to return on investment.